The media reports on the Wendy’s robot investment as if it wasn’t caused by the minimum wage hikes around the country.
The Wendy’s robot rollout gets reported as if it just happens to threaten workers who are lobbying to unionize and get fifteen dollars an hour.
The move “could jeopardize the jobs” of fast-food workers who want $15 an hour and the right to unionize? No, the Wendy’s robot replacement of humans is caused by those things. The claim that they’re merely doing it because younger consumers prefer to order from self-serve kiosks is essentially fake news. That’s not why the company is automating.
Zero Hedge’s headline was more accurate: “Minimum Wage Massacre: Wendy’s Unleashes 1,000 Robots To Counter Higher Labor Costs.”
Who could have seen that coming? As we noted previously, minimum wage laws – while advertised under the banner of social justice – do not live up to the claims made by those who tout them. They do not lift low wage earners to a so-called “social minimum”. Indeed, minimum wage laws — imposed at the levels employed in Europe — push a considerable number of people into unemployment. And, unless those newly unemployed qualify for government assistance (read: welfare), they will sink below, or further below, the social minimum.
As Nobelist Milton Friedman correctly quipped, “A minimum wage law is, in reality, a law that makes it illegal for an employer to hire a person with limited skills.”
Despite the piling up mountain of evidence on the harmful “unintended consequences” of artificially high minimum wages, we suspect we already know how this story ends. After all, it’s much easier to win elections by promising people more stuff rather than less. And, as an added bonus, when it all goes horribly wrong it’s very easy to lame the blame at the feet of the wealthy 1%’ers who are behind all the layoffs. Checkmate.
This is the best chance the DNC has of maintaining voter loyalty among the poor. It is a recipe for gaining power:
- By advocating minimum wage increases, progressives seem to promise to improve the lives of the marginal.
- When Republicans oppose raising minimum wage, the liberals can portray them as enemies of the poor.
- Then, if they get a minimum wage increase, joblessness increases, leaving even more desperate voters who are attracted to vote for Democrats and their worse-than-useless promises.
Beyond all that, there is a double incentive to displace marginal workers. Not only is the minimum wage being raised in many places, but the Federal Reserve continues to keep interest rates low. Thus, the cost of investing in new technology is artificially low while wages are being made artificially high.
Should we hate Wendy’s and other restaurant chains for their behavior?
What choice do they have? Consumers are not going to pay more for food. Wendy’s exists at the pleasure of its customers. The company cannot force them to subsidize a labor force. Wendy’s has to automate or worry about going out of business eventually.
Here is what this news story said about Wendy’s robot plan:
“Last year was tough — 5 percent wage inflation,” said Bob Wright, Wendy’s chief operating officer, during his presentation to investors and analysts last week. He added that the company expects wages to rise 4 percent in 2017. “But the real question is what are we doing about it?”
Wright noted that over the past two years, Wendy’s has figured out how to eliminate 31 hours of labor per week from its restaurants and is now working to use technology, such as kiosks, to increase efficiency.
This is what happens when government interferes in the economy.